Profits at top banks fall more than 50% in 3rd quarter

Excluding Krungsri (Bank of Ayudhya), the nine commercial banks' accumulated third-quarter net profit was Bt23.57 billion, down an average 55.18 per cent from Bt82.13 billion in the same period last year. The banks' net profit in the first nine months this year was Bt87.18 billion, down 34.5 per cent from Bt133.15 billion from last year.

Most of the drop in profit was attributed to the rise in reserves to cope with debt defaults amid the economic slowdown.

The five banks showing the biggest third-quarter profit drop were CIMB Thai Bank – down 77 per cent to Bt81 million; Siam Commercial Bank – down 68.9 per cent to Bt4.64 billion;

Bangkok Bank – down 57.4 per cent to Bt4.01 billion; Krungthai Bank – down 51.9 per cent to Bt3.05 billion; and Kasikorn Bank – down 32.8 per cent to Bt6.67 billion.

The banks' total reserves for the first nine months were Bt160.62 billion, up Bt61.35 billion or 61.8 per cent year on year. The three banks with the highest reserves are Tisco Financial Group, up 591 per cent; TMB Bank (129 per cent); and Krungthai Bank (87.7 per cent).

Meanwhile, the nine banks' held non-performing loans (NPLs) worth a total Bt474.56 billion at the end of the third quarter, up 17.6 per cent year on year. The three banks with the highest NPLs are Krungthai Bank at Bt110.66 billion, up 0.8 per cent; Bangkok Bank at Bt107.74 billion, up 25 per cent; and Kasikorn Bank at Bt96.74 billion, up 21.9 per cent.

Khattiya Intharawichai, Kasikorn Bank's chief executive officer, said its net profit dropped due to a 70.24 per cent rise in reserves to Bt17.69 billion for expected credit loss during the virus crisis.

Arthid Nanthawithaya, Siam Commercial Bank's CEO, said SCB had assessed the quality of its loan portfolio carefully and was monitoring loan quality deterioration amid the Covid-19 fallout. The bank’s NPLs rose to 3.32 per cent from 3.05 per cent in June.

Kasikorn Research Centre's Kanchana Chokpaisansilp predicts banks will face more challenges in the fourth quarter this year because exports and tourism are yet to recover.

"We expect the banks' fourth-quarter expenses to rise more than the previous quarter from setting up of reserves to cope with future risks, which will see net profits stay in negative territory," she said.

"Meanwhile, banks' NPLs this year would rise more than our previous forecast of 3.5 per cent due to increasing risks," she added.